412 F.

3d 304

605 PARK GARAGE ASSOCIATES, LLC, and ROC 65th

Street Associates, LLC, Plaintiffs-Counter DefendantsAppellees-Cross Appellants,
v.
605 APARTMENT CORPORATION, Defendant-Counter
Claimant-Appellant-Cross Appellee.
Docket No. 04-4194-CV(L).
Docket No. 04-42460CV(XAP).

United States Court of Appeals, Second Circuit.

Argued: June 9, 2005.
Decided: June 20, 2005.

Ted Poretz, Cynthia L. Ginsberg, Bingham McCutchen LLP, New York,

N.Y. for Defendant-Counter Claimant-Appellant-Cross Appellee.
Michael B. Kramer, Michael B. Kramer & Associates, New York, N.Y.
for Plaintiffs-Counter Defendants-Appellees-Cross Appellants.
Before: JACOBS, SACK, and RAGGI, Circuit Judges.
PER CURIAM.

In 1980, Congress enacted the Condominium and Cooperative Conversion

Protection and Abuse Relief Act (the "Relief Act"), 15 U.S.C. 3601, et seq.,
to regulate certain aspects of the conversion of apartment buildings from rental
properties to condominiums or cooperatives. The Relief Act prevents real estate
developers that sponsor building conversions from obtaining long term
sweetheart leases during the conversion process. See, e.g., Bleecker Charles
Co. v. 350 Bleecker St. Apartment Corp., 327 F.3d 197, 199 (2d Cir.2003);
Darnet Realty Assocs., LLC v. 136 E. 56th St. Owners, Inc., 153 F.3d 21, 24 (2d
Cir. 1998) ("Darnet I").

Pursuant to the Relief Act, and under certain circumstances, a qualifying

"contract or portion thereof," that is (i) "entered into" after the Act's effective
date and (ii) between the sponsor (or an affiliate of the sponsor) and the
condominium or cooperative, "may be terminated without penalty" by the
condominium or cooperative. 15 U.S.C. 3607(a). "No proof of one-sidedness
or unconscionability is required for the exercise of the termination right." 181
E. 73rd St. Co. v. 181 E. 73rd Tenants Corp., 954 F.2d 45, 48 (2d Cir. 1992).
However, "[C]ongress has placed `significant restrictions' on the power of unit
owners to exercise their termination right," and this Court has "refused to
broaden the relief provided by the Act beyond its literal terms." Bd. of
Managers v. Infinity Corp., 21 F.3d 528, 533 (2d Cir.1994) (citing Park S.
Tenants Corp. v. 200 Cent. Park S. Assocs., L.P., 941 F.2d 112, 114 (2d
Cir.1991) (per curiam)).
3

On this appeal, we consider whether a cooperative may terminate a lease

entered into by a sponsor (or its affiliate) prior to the Relief Act's effective date,
where two lease renewal options contained in that lease were exercised after the
Act's effective date. We hold that the Relief Act provides no such termination
right.

* In December 1979, after a series of transactions not relevant to the resolution

of this appeal, 605 Park Garage Associates, LLC an affiliate of 605 Park
Avenue's sponsor, ROC 65th Street Associates, LLC (collectively, the
"Sponsor") leased the building's parking garage (the "Garage Lease"). That
lease, entered into some months prior to the Relief Act's 1980 effective date,
offered the Sponsor two lease renewal options, for successive ten-year periods:
January 1, 1990 to December 31, 1999; and January 1, 2000 to December 31,
2009. The Sponsor exercised both renewal options after the Relief Act's
effective date. However, on February 27, 2004 after the Sponsor's
ownership of 605 Park Avenue fell below the 25% threshold specified in the
Relief Act the current owner of 605 Park Avenue, a cooperative corporation
known as 605 Apartment Corporation (the "Cooperative"), purported to
terminate the Garage Lease pursuant to the Relief Act.

The Sponsor thereafter initiated the current litigation in the Southern District of
New York (Daniels, J.), arguing that because the Garage Lease was "entered
into" prior to enactment of the Relief Act, the Cooperative could not terminate
the Garage Lease under that Act. The Cooperative filed a counterclaim seeking
a declaratory judgment that the Cooperative had properly terminated the Garage
Lease, under the theory that the Sponsor's exercise of the second renewal
option on November 21, 1996, brought the Garage Lease within the ambit of
the Relief Act.

The parties cross moved for summary judgment, and the district court granted
the Sponsor's summary judgment motion, but denied the Sponsor's request for
attorneys' fees. We here review the district court's final judgment.

II
7

The decisive issue presented is whether the renewal options in question

constitute "portions" of the Garage Lease that were "entered into" after the
Relied Act's effective date of October 8, 1980. "We review the district court's
determinations on the parties' summary judgment motions de novo." Field v.
United States, 381 F.3d 109, 110-11 (2d Cir.2004).

The Cooperative argues that the renewal options are temporally divisible
"portions" of the Garage Lease. We need not consider this argument because,
even assuming the validity of this contention, the Cooperative must still
establish that those portions were "entered into" after October 8, 1980. See 15
U.S.C. 3607(a) (the termination right applies only to contracts or portions
thereof "entered into after the effective date of this title").

Since the exercise of a lease renewal option does not create a new lease under
New York law, see Dime Savs. Bank, FSB v. Montague St. Realty Assocs., 90
N.Y.2d 539, 543, 664 N.Y.S.2d 246, 686 N.E.2d 1340 (1997), and since the
Garage Lease was executed before October 8, 1980, the plain language of the
Relief Act dictates that the Garage Lease may not be terminated under that Act.
Moreover, application of the Relief Act in the manner the Cooperative urges
would implicate retroactivity concerns. See Landgraf v. USI Film Prods., 511
U.S. 244, 269-70, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994). The federal courts
will apply a statute retroactively only where provided with a clear articulation
of congressional intent, see id. at 264, 114 S.Ct. 1483 which is lacking here.

III
10

The Sponsor cross appeals the district court's denial of the attorneys' fees
request. "We review the district court's decision on an application for attorneys'
fees, and the amount awarded, if any, for abuse of discretion." Darnet Realty
Assocs. LLC v. 136 E. 56th St. Owners, Inc., 214 F.3d 79, 87 (2d Cir.2000)
("Darnet II").

11

The Relief Act provides that "[t]he amounts recoverable under this section may
include ... reasonable attorneys' fees... and court costs." 15 U.S.C. 3611(d);
see also Darnet I, 153 F.3d at 30 (district court may award a prevailing sponsor

attorneys' fees where "it would be fair, just and equitable to award any such
fees"). The district court denied the request for attorneys' fees, reasoning that:
(i) the Sponsor retained possession of the garage; (ii) the terms of the lease
were financially advantageous to the Sponsor; and (iii) the Cooperative raised a
colorable claim. Indeed, the claim raised a plausible issue of first impression.
The district court did not abuse its discretion.
CONCLUSION
12

For the foregoing reasons, the judgment of the district court is affirmed.